Copper Extends Collateral Management to OTC Derivatives with ClearLoop

London, April 23 — Over the past few months, Copper has been working closely with OTC  derivative  dealers,  foundations, venture capital firms and institutional trading desks to address a key challenge in the digital asset OTC derivatives market: how can collateral management arrangements be optimised to align Dealers capital efficiency requirements with a reduction in counterparty risk for Takers.

Understanding the Current Market Structure

In traditional OTC derivatives arrangements, Dealers typically require Takers to transfer margin via full title transfer, often up to 100% of the trade’s notional value. While this enables Dealers to efficiently rehypothecate assets for hedging and balance sheet optimization, it exposes Takers to the Dealer’s credit risk, and more importantly, the systemic risk associated with the broader market.

Several digital asset custodians, including Copper, already enable Takers to post margin into dedicated tri-party accounts where Dealers hold a security interest while Takers retain asset ownership. This structure reduces counterparty and systemic risk compared to traditional margin transfers but typically limits Dealer flexibility and economic capacity, leading to smaller position sizes and wider spreads. Copper has now solved for this final leg by extending tri-party margining to the ClearLoop network; enabling Dealers to efficiently hedge across connected exchanges while Takers retain reduced counterparty risk and greater control over collateral deployment.

ClearLoop Assigned Collateral

Leveraging its market-leading off-exchange settlement network ClearLoop, Copper, in partnership with some of the ecosystems largest institutional market participants, has developed a tri-party solution designed to balance Dealers capital efficiency requirements with Taker’s demands for risk mitigation. 

In this model, Taker’s post margin directly to the Dealer’s ClearLoop account at Copper, where asset use is restricted, Copper ensures that margin assets can only be rehypothecated within the ClearLoop network of10 connected exchanges. 

Dealers maintain economic capacity and capital efficiency, while Takers benefit from reduced counterparty and systemic infrastructure risk as assets remain safeguarded within Copper’s custody. 

The Road Ahead

As institutional participation in digital asset derivatives continue to grow, collateral architecture is becoming central to how counterparties assess risk.

ClearLoop Assigned Collateral represents a significant step toward a more balanced and resilient structure for OTC digital asset derivatives; Strengthening asset protection without compromising liquidity or efficiency.

About Copper 

Since being founded in 2018, Copper has been building the standard for institutional digital asset infrastructure with a focus on custody and collateral management. Underpinned by multi-award-winning technology, Copper has built a comprehensive and secure suite of products and services required to safely custody and trade digital assets. At the core of Copper’s infrastructure is ClearLoop, which enables clients to manage collateral and settle trades across multiple exchanges, while mitigating counterparty risk and increasing capital efficiency.

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